Industry officials said Monday that geopolitical risks around the Strait of Hormuz — a key global energy corridor — and the Red Sea, a major logistics route, are adding uncertainty across the economy.
The Strait of Hormuz carries about 20% of the world’s traded oil, as well as about 70% of South Korea’s imported crude and 20% of its imported liquefied natural gas. While the route is dominated by oil tankers rather than container ships, heightened tensions could also destabilize nearby Red Sea lanes, pushing up overall ocean freight rates. Extra costs from tankers transiting under risk or waiting to pass would likely feed into upward pressure on oil prices.
Refiners have not set up a separate task force, but have begun internal risk checks and are preparing responses. A sharp rise in crude prices can bring short-term inventory valuation gains, but if import costs climb quickly, refining margins are likely to narrow. “Since the Strait of Hormuz has not moved to a concrete stage of closure, we are closely watching Middle East developments, longer-term oil price trends and potential impacts on crude imports,” a refining industry official said.
The government and refiners say South Korea holds about seven months of strategic oil reserves, limiting near-term supply concerns. If the situation drags on, however, disruptions to crude procurement combined with higher insurance premiums and freight costs could increase the burden. Global analysts have also issued pessimistic forecasts that oil could reach $100 a barrel if Iran actually blocks the strait.
Shipping companies, while tense, are weighing whether the industry downturn could ease. If detours become necessary, ocean freight rates could rise as much as 50% to 80%, with the Shanghai Containerized Freight Index rebounding after declines. In the tanker market, some forecasts say Middle East-to-Asia VLCC rates could top $200,000 a day as the situation overlaps with rising global LNG demand.
At the same time, the Iran strikes are seen as effectively ending expectations that HMM would return to the Suez route in the second half of this year. Over the longer term, higher fuel and insurance costs could also limit profit gains.
Petrochemical producers, already trying to survive by consolidating naphtha cracking capacity, face another shock. Higher crude prices lift naphtha prices and then feed into basic petrochemical products such as ethylene. But ethylene prices have been largely flat since last year due to oversupply. With feedstock costs rising while product prices hold steady, margins are likely to shrink further, worsening profitability for petrochemical firms.
* This article has been translated by AI.
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